Partner Article

Quoted companies in the dark over emissions reforms

The majority of quoted companies in the North West are ‘completely unaware’ of significant changes being proposed by the Government, relating to greenhouse gas (GHG) emissions.

Under the reforms, all UK quoted companies – particularly those in energy intensive industries – will have to declare GHG emissions associated with business activities, as part of their annual directors’ report – or face stiff financial penalties for non-compliance.

Despite continued speculation over the last four years about the regulations, regional companies have admitted that they remain ‘totally in the dark’ about when mandatory reporting needs to be carried out, and what is required of them under the proposed legislation.

With the changes now expected to be implemented in less than five months’ time (1 October 2013), law firm Gateley has warned that companies should already have processes in place to deal with the revised regulation, following feedback from a number of clients.

For quoted companies, the requirement to report applies to the year ending on or after 1 October 2013 – therefore for many, the reporting period is well underway. Companies will be expected to report on a ‘comply or explain’ basis – either to confirm their co-operation, or explain their failure to do so in their published accounts, stating what steps are being taken to ensure compliance in the future.

Nigel Brown, corporate partner at the Manchester office of Gateley – the top 50, national law firm – said: “The vast majority of regional companies are completely unaware of mandatory reporting and the changes are likely to catch them very much by surprise. With the clock ticking, businesses must ensure that appropriate procedures are in place for measuring relevant emissions, in order to ensure a smooth transition once the new reporting obligations are in force.”

The changes are part of the draft Greenhouse Gas Emissions (Directors’ Report) Regulations 2013 and affect a number of activities. These include: the combustion of fuel in any premises, machinery or equipment; the use of any means of transport, machinery or equipment; the operation or control of any manufacturing process; and the purchase of electricity, heat, steam or cooling.

Brown added: “The true impact of the legislation, in terms of the cost of non compliance, the burden on jobs and the investment required to comply, is still very much uncertain. However, there is a clear need for the Government to raise awareness of the reforms amongst affected companies, particularly if it is to meet its global obligations to reduce greenhouse gas emissions by 80 per cent (when compared with 1990 levels).

“Like many pieces of legislation that start with good intentions, there will undoubtedly be a trade off with the cost of compliance. What is clear is that from these reforms an entire secondary industry will emerge, with a myriad of consultancy services likely to enter the North West market over the coming years.”

The Department for Environment, Food and Rural Affairs (DEFRA) is now expected to take into account responses to its consultation on the matter, before the revised regulations go before both Houses of Parliament.

This was posted in Bdaily's Members' News section by Ellie OConnell .